Estate Planning Awareness Week in October is a good reminder to take a closer look at something that is easy to put off. Estate planning isn’t just about what happens to your assets after you die. It’s also about making your wishes clear, protecting the people you care about, and putting plans in place for situations when you may not be able to make decisions for yourself.
If it’s been a while since you reviewed your estate strategy, or if you don’t have one yet, here are five important areas to consider.
1. The Big One: Probate
Probate is the legal process that wraps up a person’s legal and financial affairs after their death. Probate can be costly and easily take months or years, depending on the state. While no estate strategy can completely eliminate the risk of an extensive probate, managing the probate process may be possible with a valid will and assets that avoid probate.1
Some assets that avoid probate include:
- Property held in a trust
- Jointly held property that isn’t common property
- Death benefits from insurance policies
- Property given away before you die
- Assets in a pay-on-death account
- Retirement accounts with a named beneficiary
2. Living wills
These aren’t about what happens after you die, but rather what to do while you are still living. They outline instructions on how to handle difficult decisions regarding your estate. Despite the importance of this document, only 32% of Americans have one. The #1 cited reason for not having a will is procrastination. 2
3. Tax exemption strategies
In 2026, the estate and gift tax exemption is $15 million.3 Potentially hundreds of thousands of additional American households can take advantage of the strategies, passing on some of or all of their assets free of estate taxes. Less than 1 out of every 1,000 estates will exceed the exemption. 4
4. Living Trusts
Created and funded while you are alive, living trusts are composed of assets you choose to put into them. Managed by a trustee (usually you), the assets are structured to pass to a beneficiary, or beneficiaries, automatically upon your death, much like a will.5
5. Power of Attorney
This is a written authorization empowering a person to execute personal and legal matters on your behalf. A good strategy may be to pick a person who either has some experience in these fields or has the necessary qualities to handle these decisions This is often a spouse or adult child. A durable power of attorney allows that person to act on your behalf, even if you’re incapacitate or otherwise unable to make decisions.
Estate Planning Awareness Week is a reminder that an estate strategy isn’t a “set it and forget it” item. Families change, assets change, laws change, and even your own wishes can change over time. Whether you already have an estate plan or have been meaning to get started, October is a good opportunity to review what you have in place, make sure beneficiary designations and important documents are up to date, and identify any gaps that may need attention. A little planning today can provide greater clarity for you and the people you care about in the future.
Sources:
1. Investopedia.com, December 19. 2023
2. Caring.com, 2024
3. IRS.gov, 2024
4. IEP.org, Dec 7, 2023
5. Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider using a professional who is familiar with the rules and regulations.